Discussion of Best Business Practice. City of Culver City California City Council Agenda Item Report Item Number: A 7 Meeting Date: 11/07/05 AGENDA ITEM: Discussion of a Best Business Practice to Charge Funds a Monthly Interest Assessment (Payable to the General Fund) When Showing a Negative Cash Balance. Contact Person/Dept.: Crystal C. Alexander/City Treasurer's Office Fiscal Impact: Yes Public Hearing: Action Item: X Public Notification: Master Notification List on 11/2/05 General Fund: Yes X No X No Phone Number: (310) 253 5865 Attachments: Department Approval: Crystal C. Alexander 10/25/05 City Controller Approval: Marlee Chang 11/1/05 RECOMMENDATION: CAO Approval: Jerry Fulwood 11/2/05 That the City Council approve this best business practice and direct the City Treasurer to draft a City Council policy on this concept for adoption. BACKGROUND: Part of this year s budget preparation process included an in depth review of each fund s fund balance and the interplay of the various funds in particular the impact other funds have on the City s primary fund the General Fund. At the request of the CAO the City Treasurer s Office has prepared a best business practice to address the concern that certain funds are during the year conducting short term borrowing from the General Fund. This proposal comports with the Government Finance Officers Association 1996 recommended practice1 for setting charges and fees which calls for full costing incorporating direct and indirect costs. There are certain City funds that have insufficient cash on a month to month basis to operate independently. The City Treasurer s Office pools the cash of all the funds together (separately for the Redevelopment Agency monies) to maximize investment returns. Those funds with insufficient cash can have disbursements paid with cash from the City investment pool. In effect those funds are borrowing cash from the City investment pool. The lion s share of the City s investment pool (short and long term...
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